The Union government continued to protect Madhabi Puri Buch, the chairperson of the Securities and Exchange Board of India (SEBI), by dismissing questions asked by members of parliament (MPs), including Congress president Mallikarjun Kharge. The Congress president and MP Ranjeet Ranjan asked questions about conflict of interest and transparency in SEBI's leadership.
In a written reply in the Rajya Sabha, Pankaj Chaudhary, minister of state for finance, says, "SEBI has adequate internal mechanisms for addressing issues relating to conflict of interest, which include a disclosure framework and provisions for recusal."
They also asked the minister of finance to state the measures implemented to maintain proper records and ensure public trust, given SEBI's response under the Right to Information (RTI) Act, which cited a lack of readily available information on cases of recusal. "The manner in which government plans to address concerns regarding potential conflicts of interest involving SEBI's leadership and whether the government is considering to review SEBI's internal mechanisms to handle such disclosures."
In his reply, Mr Chaudhary, the minister of state, reiterated that the board of SEBI has adopted a code on conflict of interests for members of its board, including the chairperson, to ensure that the board conducts itself in a manner that does not compromise its ability to accomplish its mandate or undermine the public confidence in the ability of member(s) to discharge his responsibilities.
"Other senior officials, i.e., employees of SEBI are governed by the SEBI (Employees' Service) Regulations, 2001, that ensure transparency and accountability in the declaration of financial assets and address potential conflicts of interest," he added.
As reported by Moneylife, the SEBI board and the finance ministry are pretending that no concern exists, while the SEBI chairperson and her husband, Dhaval Buch, have denied any conflict of interest. The question is: What code of conduct has Ms Puri Buch adhered to? Is it the more stringent government of India (GoI) regulations that govern her appointment, or the wishy-washy Code to Avoid Conflict (Conflict Code) of 2008, which is of doubtful legal standing, that appears to have deliberately diluted the government rules applicable to SEBI's senior-most officials.
The Conflict Code, which was voluntarily adopted by the SEBI board in December 2008, has remained unchanged for over 16 years, even as the regulator has continuously introduced stricter compliance rules for investors, traders and market intermediaries. This raises an important question: Why has SEBI while tightening regulations for all market intermediaries and investors, allowed such an outdated and voluntary code to remain in force? (
Read: SEBI's Conflict of Interest Code: A Riddle Wrapped in a Mystery inside an Enigma)
In September this year, the Union ministry of finance (FinMin) denied sharing information on dates when Madhabi Puri Buch, the SEBI chairperson and her family declared their financial assets. This was in response to an application filed under the Right to Information (RTI) Act.
Delhi-based RTI activist commodore (Cmde) Lokesh Batra (retd) had filed the application seeking information on the appointment of Ms Buch and dates when the SEBI chairperson declared details of financial assets and equities held by her and her family members to the government.
As reported by Moneylife, except sharing dates of appointment of Ms Buch, SEBI also did not provide any information on the appointment, her application for the post, declaration of assets and cases where she had recused herself due to conflicts of interest. In fact, by denying the information, SEBI contradicted its statement issued on 11 August 2022.
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